DRG Payment for Long-term Ventilator Patients—Revisited

This article provides a follow-up to an evaluation originally presented in Chest1of the financial impact of diagnosis related group (DRG) payment for long-term ventilator-dependent Medicare patients at Rush-Presbyterian-St. Luke's Medical Center. Since the results of our original study were presented, the Health Care Financing Administration (HCFA) has created two new DRGs for patients who have respiratory principal diagnoses to help recognize the resource intensiveness associated with mechanical ventilator support. The original 95 patients' payment, which was originally calculated to be $2.2 million below costs, was recalculated to be $1.9 million below costs, representing a 13 percent reduction in the loss. We conclude that although HCFA's recent remedial action is a step in the right direction, it provides little relief from the DRG system's financial bias against long-term ventilator-dependent patients, because the new ventilator DRGs encompass only a small segment of these patients. As an alternative approach, we recommend a single DRG for patients who, regardless of their principal diagnoses, experience chronic respiratory failure requiring a minimum of three days of continuous ventilator treatment.